Bundesbank President Joachim Nagel emphasized the growing importance of determining future monetary policy steps on a meeting-to-meeting basis, taking into account economic and financial developments.
Meanwhile, he assured that the central bank will “continue to move forward resolutely on the path of monetary normalization until inflation is contained and price stability is restored.”
he pointed out that the cumulative 350 basis points in rate hikes since last July have yet to fully impact the economy. Given the persistently high inflation rates and the considerable distance from the 2% medium-term target, he suggested that it’s time for policymakers to expedite the reduction of the ECB’s bond holdings, which commenced this month.
“In my view, it can be accelerated from the summer,” Nagel said. “Markets will be able to handle it well, and in terms of monetary policy, it’s necessary to reduce the balance sheet of the Eurosystem more quickly.”
